OTTAWA: Toronto home prices and new listings surged in April from a year earlier while sales fell, the Toronto Real Estate Board said on Wednesday, suggesting the market may be starting to rebalance after new housing rules were put it place amid fears of a bubble in Canada's largest city.

The industry group said the average home price rose 31.7 % in April from a year earlier, while new listings rose 33.6 % and sales dipped 3.2%.

Toronto is the capital of the province of Ontario, which announced a foreign buyers tax late in April in a move expected to dampen demand.

"It was encouraging to see a very strong year-over-year increase in new listings. If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions," said Jason Mercer, TREB's director of market analysis.

"It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years. Expect annual rates of price growth to remain well above the rate of inflation as we move through the spring and summer months," he added. (Editing by W Simon)

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The unused Input Tax Credit (ITC) on goods and services lying with the property developers as on March 31 will be reversed for under-construction properties since the ITC stands to lapse from April 1 for such houses.